Majority of Gen Y not Saving for Retirement
Scottrade, the online investing firm, found 60% of Gen Yers (born 1983-1991) saved nothing toward retirement last year and 40% plan to save nothing in 2011. An additional 21% plan to save only one to two percent of their income this year.
The survey asked at what age they’d recommend people start saving for retirement; respondents gave a mean age of 29.2 years old, giving even the oldest of the group two more years before this generation thinks they need to start saving.
The survey indicates Gen Y’s lack of action doesn’t stem from lack of awareness or interest. Almost three-fourths of Gen Yers (73%) realize that they are not saving enough for retirement. Other surveys have found that Gen Y defines “financial success” in terms of ability to save (see “Gen Y Focused on Savings“).
“What Gen Y may not realize is that older generations based their retirement planning on the three-legged stool of Social Security, savings and employer pensions,” said Craig Hogan, director of customer intelligence at Scottrade. “The approach their parents and grandparents took toward saving is no longer appropriate because the old model doesn’t exist. By the time Gen Y retires, they may have only one reliable leg to stand on – their own savings – and they need to plan accordingly.”